Oil prices fell to their lowest since the third quarter of 2017 on Friday, heading for losses of about 11 percent for the week, as global oversupply kept buyers away from the market ahead of the long festive break. U.S. West Texas Intermediate crude oil was down 19 cents, or half a percent, at $45.69, on course for a decline of 10.8 percent for the week. WTI earlier fell to $45.13, its lowest intraday price since mid-July 2017.
Brent crude was down 85 cents, or 1.6 percent, at $53.50 per barrel by 9:11 a.m. ET, after dropping $2.89 or 5 percent on Thursday. Brent is set for a loss of around 11.2 percent this week.
Crude has lost ground along with major equity markets as investors fret about the strength of the global economy heading into next year. Further concerns were raised as the United States, the world’s biggest oil consumer, may have a government shutdown later on Friday.
Falls were exaggerated by thin trade and risk aversion ahead of Christmas and the New Year holidays, traders said.
“To say things are a bit negative (is) a significant understatement,” said Stephen Innes, head of trading for Asia-Pacific at OANDA.
Since reaching multi-year highs at the beginning of October, both crude oil benchmarks have lost more than a third of their value in their steepest collapse for three years.
Driving the sell-off has been sustained oversupply as the United States has emerged as the world’s biggest crude producer thanks to the success of its shale industry.
The United States now pumps 11.6 million barrels per day of crude, putting it ahead of Saudi Arabia and Russia.
The big oil producers in OPEC, dominated by Middle East Gulf states which mostly rely on energy exports, have agreed to reduce production to try to push up prices.
But those output cuts — a reduction with Russia and other non-OPEC producers of 1.2 million bpd — do not kick in until next month, and meanwhile global inventories are filling up fast.
“The bear fest continues,” said Stephen Brennock, analyst at London brokerage PVM Oil.
“According to OPEC’s own forecasts, global oil stocks will build by 500,000 bpd in the first half of 2019. This will compound a glut in OECD commercial oil stocks.”
In an effort to show its commitment to reducing supply, OPEC will release a table detailing output cut quotas for its members and allies such as Russia, OPEC Secretary General Mohammad Barkindo said in a letter reviewed by Reuters.
To reach the proposed cut of 1.2 million bpd, the effective reduction for member countries was 3.02 percent, Barkindo said.
That is higher than the initially discussed cuts of 2.5 percent as OPEC seeks to accommodate Iran, Libya and Venezuela, which are exempt from any requirement to cut.